Moving the needle on real estate investment was the topic of a Living Future panel including Jason Twill (Vulcan), David Baker (Earth Economics), Theddi Wright Chappell (Cushman & Wakefield), Stuart Cowan (Autopoiesis). They noted that investment in sustainable real estate seems to be “topping out” in the market at this time — at LEED Platinum. Their hope is to help the market cross that barrier into higher realms of sustainable achievement, such as the Living Building Challenge.
Jason, David, Stuart, and Theddi are coauthors of “Economics of Change: Catalyzing the Investment Shift Towards a Restorative Built Environment.” The research study was funded by Bullitt Foundation, a long time supporter of environmental protection in the Northwest. The point of the study was to “provide evidence of monetized environmental and social benefits…currently not considered in conventional real estate model(s).” The authors hope to provide a defensible rationale for including these public and private benefits into investment models, appraiser methodologies, and supporting policies. This is especially important for U.S. real estate investments where ROI and IRR are the ultimate drivers of most transactions.
The report lays out the ABC’s, if you will, of Ecosystem Goods and Services, the potential Ecosystem Services that Living Buildings might provide, and finally the opportunity to measure, monetize, and value those ecosystem services. The study takes a scholarly approach, a step up from the early days when we in the green building field had to rely more on reason and intuition, since we had little real data to base our assumptions on. (Not that reason and intuition is bad…it’s what got us here, yes?).

"The Economics of Change"

The report also introduces the concept of integrated real estate investment modeling. From this layperson’s view, it seems to build on the conventional model, rather than replace it — an approach that makes a good deal of sense. The methodology they propose will allow many environmental and social benefits currently valued at zero to be seen as economically valuable, and therefore marketable. In the next phase of their work, they plan to produce detailed calculations and case studies of the environmental and social benefits of Living Buildings, test the impact of these values of valuation models or appraisals, and create an open source prototype of the integrated real estate investment marketing tool to “demonstrate how environmental and social benefits can be embedded within a pro forma in an new building development context.”
In addition to taking this tool out to the real estate development communities (appraisers and valuation specialists), they hope to provide a basis for changes in local, state, and federal policy that will acknowledge public benefits of Living Building development and incentivize it.
As Theddi noted, “right now investors are going for the low hanging fruit — energy efficiency — for example. We need to provide sufficient rationale if we want them to go beyond that.”

Hear, hear.

Kathleen O’Brien is a long time advocate for green building and sustainable development since before it was “cool.” She lives in a green home, and drives a hybrid when she drives at all. Having recently sold her firm, O’Brien & Company, she is now focused on leadership work with those “still in the trenches.” For more info see www.emergeleadership.net

The following post is by Brad Kahn, president of Groundwork Strategies. He manages communications for the Bullitt Center project.

The roof of the Bullitt Center on East Madison Street is under construction now and all the structural elements are in place.

Skylights are being framed into the roof to maximize daylight and reduce the need for lighting.

Photo by Sky-Pix

Today President Rosen Plevneliev from Bulgaria, who is a former real estate developer, will tour the Bullitt Center as part of a trade mission to Seattle.

After campaigning for president on a platform that included energy efficiency in buildings, Plevneliev will be in Seattle today before heading to the NATO summit in Chicago next week. His visit to Seattle is focused on international trade and economic development. In particular, he is interested in learning about green building and clean energy technology, which is why he is touring Bullitt Center, the world’s greenest office building.

In the next few weeks, we will begin outreach to brokers to begin marketing office space inside the Bullitt Center. It will be marketed at rates comparable to new class-A space in downtown.

Photo by John Stamets

The HVAC system is going into the building, including the six-story composting toilet system.

McGivra Place, the park next door, now has a final design direction and the process is moving forward, with re-development expected later this summer or early fall. The park project is the first to pursue the Living Building Challenge for landscapes.

The following post is by Brad Kahn, president of Groundwork Strategies. He manages communications for the Bullitt Center project.

When the Bullitt Foundation began work on the Bullitt Center, Denis Hayes, the foundation’s president and CEO, had a clear vision that the architecture should be regionally relevant. Noting that buildings in Seattle and Phoenix are too frequently designed in the same ways, Hayes set out to promote the idea of a “regional vernacular” in architecture that draws on the environment surrounding Seattle for guidance. And in the Pacific Northwest, there is no environmental feature more prominent than forests, making wood a logical building material.

Add in the fact that when it comes from a responsibly managed forest, wood is among the most environmentally friendly building materials, and it is only natural that the Bullitt Center is a heavy-timber framed structure.

As the first commercial building to pursue the Living Building Challenge, the Bullitt Center team is working hard to meet all 20 “imperatives,” as the requirements are known. Included in this list is an imperative focused on “Responsible Industry,” requiring that “all wood must be certified by the Forest Stewardship Council (FSC)” or from salvaged sources.

With construction well under way, wood framing for the Bullitt Center has begun.

And anyone who has passed the job site on 15th & Madison has likely noticed the glued, laminated timbers, or “glulams” as they are known in the industry. Manufactured by Calvert Glulams in Vancouver, Wash., the glulams offer several environmental benefits, in addition to being stronger than traditional sawn timbers. First, they are from forests certified to the standards set by the Forest Stewardship Council, which is widely recognized to be the most rigorous and prescriptive benchmark for forest management globally. All wood for the project comes from within a 1,000-kilometer radius, as required by the Living Building Challenge. In the case of the glulams, the wood came from FSC-certified Douglas fir forests in Idaho, so the project is helping support a regional economy for wood from responsibly managed forests. And because the glulams are manufactured by combining smaller dimensional lumber, they reduce pressure to harvest larger, older trees that historically were needed to mill large dimension timbers.

is Skanska USA’s first development effort in the Seattle market. (Talk about a way to come to the market with green guns-a-blazing!)

Brooks Sports is the anchor tenant and will take 80,000 square feet and move 300 employees into the space in late 2013. Skanska said it would lease the site from the owner, Fremont Dock Co. The site is at 3400 Stone Way N., next to the Burke Gilman Trail and near Lake Union.

This project is of course fascinating because it’s a living building, widely considered the toughest green building certification on the planet. But another thing that makes it stand out is who’s building it. All living buildings on this coast that I’m aware of are built by schools (University of British Columbia’s CIRS project); nonprofits (the Bullitt Foundation’s headquarters in Seattle); consortium’s of city groups or donors (The Bertschi School Science Wing); or partnerships involving all of the above (the Oregon Sustainability Center in Portland). There’s also a few home projects thrown in. These groups have various resources (tax credits, donors, endowments etc.) that a standard developer doesn’t have access to.

Skanska’s project in Fremont is the first I’m aware of to be built by a commercial developer on its own. Granted, it is being self-financed. But the fact that Skanska is building it means the company sees a future in living buildings. It’s taking a chance! In the scale of things, it will be incredible to see how this project works out because it will inevitably be used as a living building test case for other developers.

Living buildings are fascinating creatures but they’re not cheap. Generally, I’m hearing that developing a living building costs a third more than a standard project. Schools and nonprofits are willing to make that investment. But the formula gets more complex with private development. Adding to the complexity, Skanska is aiming for its project rents to be market rate.

Chris Rogers of Bullitt’s development partner Point32 says Bullitt’s space will be market rate too, though it’s being marketed towards environmentally-minded businesses and organizations. The Cascadia Green Building Council is one tenant. For these organizations, the environment is a critical part of what they do. For Skanska’s more mainstream tenants, locating in a living building says they care. But Skanska’s also got to do more convincing.

In this DJC article from last June, Peter Busby of Vancouver’s Busby Perkins + Will said it cost his team $100,000 to go to living building status on two Vancouver projects. He said it generally costs $40,000 to have a project certified LEED gold. The Bullitt Center project is costing about $30 million, with Bullitt putting up half that amount and borrowing the rest from US Bank. Rogers of Point32 says a lot of the cost is a first-cost premium, because it’s the first time his team (or any team) is moving through a living building project of this size with the city. But there’s still a premium.

According to the International Living Future Institute, it costs $20,000 for living building certification of a building that is between 107,640 and 538,195 square feet.

Skanska’s project is also interesting because of what it could bring to the neighborhood. The end of Stone Way near Lake Union has a handful of stores but is kind of a dead zone. In a Seattle Times story, Ryan Gist, a neighbor called it “an odd, pseudo-industrial street that really doesn’t do much for the neighborhood.”

Once complete, the ground floor of this building will house Brooks’ first ever retail concept shop. The goal is for the shop to act as a gathering place for the community and trail users.

There are some neighborhood concerns about the structure’s height. Here’s hoping a clean agreement can be made on that topic so this revolutionary project can move forward.

By the way, back in January, I wrote this post about the launch of Skanska’s Seattle commercial development division. In it, I said:

“I’m curious to see what kind of projects they pursue, what kind of sustainable goals they target, and what kind of green technologies they might choose to pursue that others wouldn’t be able to. Of course, they could simply go the LEED gold route. Or they could build something really innovative.”

I don’t want to say I told you so but it’s fair to say this project falls to the later half of that spectrum. Now the question is to see how it plays out.

P.S. It’s interesting to see the architecture firms with living buildings under their belts. This project is being designed by LMN. Bullitt’s is designed by Miller Hull. The Bertschi project was designed by members of KMD Architects. I’m going to be waiting to see how long it takes for the area’s other big green architecture firms to add a living building to their project list. At the current pace, I’d bet we’d see another two or three pop up.

The city of Seattle is planning to increase its requirement that city owned, financed or operated buildings larger than 5,000 square feet be LEED gold, up from LEED silver. Here’s my question: is it enough?

In 2000, Seattle broke some major ground when it required city buildings be LEED silver. If you go back to 2000, LEED was still really, really new. That’s reflected this DPD data slide supporting policy changes here. Check it out, in 2003 and 2004 there were more city LEED buildings than those in the private sector. That switches in 2005 and after 2006, LEED in the private sector continues to grow by leaps and bounds each year.

I started this job at the DJC at the start of 2007 and in the time I’ve been here,

I’ve certainly seen the switch. In early 2007, a story was news if a building met LEED silver or had targeted LEED gold. Then LEED platinum became the hot topic. Now, it’s net-zero energy and Living Buildings. That’s not to say that LEED is a dinosaur and that LEED platinum isn’t a big deal. It’s just that the really cutting edge projects seem to have moved beyond LEED. Silver just isn’t big news anymore.

Now, the city is looking to create a more robust policy, the outlines of which can be seen in that slide linked to above. There will also be a DJC story early next week explaining the likely changes. Generally, the city is going to require LEED gold for buildings where it previously would have required LEED silver. It also expands the program to consider major renovations and tenant improvements, sites and small projects. Sandra Mallory, DPD’s Green Building Team program manager, also said the city wants to pilot a living building and six Sustainable Sites Initiative projects, three of which are already in development. It’s some big changes. But are they big enough?

The question seems simple but also touches on the changing role of city government, especially because green building is so much larger today than it was back in 2000. Back in 2000, Seattle took a strong leadership role in its silver requirement. Making a similar, envelope-pushing switch today would likely require city buildings be net-zero energy or living buildings. Given today’s market, I’m not sure the city could make that change, even if it wanted to. Financially, I don’t know that it would make sense, or that it could even be feasible for all projects. Also, the private sector has already taken the lead in both these areas.

Then again, if Seattle wants to keep saying it is the “greenest city in the country,” something that seems to be getting a bit outdated as green and sustainable elements become mainstream, wouldn’t it have to make a ground-altering change like that? Additionally, most of its buildings in recent years have met LEED gold, though they weren’t required to. According to that slide, it still doesn’t have a LEED platinum project.

What do you think? Should the city have made a stronger stand or is LEED gold fair for now? Also, how do you think the city’s role in supporting green building should change in the future? Eventually, will the city require all its buildings be net-zero or meet living status? It’s a curious question and I’d love to hear your responses.

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